Webinar: Impact Bonds in Health - Brookings …...• Achieving the SDG health targets would require new investments increasing over time from US$ 134 billion annually to $371 billion

Webinar: Impact Bonds in Health

December 12, 2017

#impactbonds

Welcome and Introduction

Emily Gustafsson-Wright

Fellow, The Brookings Institution

[email protected]

@EGWBrookings

• Achieving the SDG health targets would

require new investments increasing over

time from US$ 134 billion annually to $371

billion by 2030

• By 2020, chronic disease will make up 57%

of the global health burden

• In the United States: $10,348 per person in

2016

• Absenteeism costs employers in US $226

billion per year

THE BURDEN OF HEALTH COSTS

Photo credit: DFAT

• Wide variety of innovative financing mechanisms for health: sin

taxes, solidarity levy on airline tickets, IFFIm

• Payment by Results in health: e.g. Health Results Innovation

Trust Fund at the World Bank

• Social and development impact bonds (SIBs and DIBs):

focusing on paying for results in the health sector

INNOVATIVE FINANCING FOR HEALTH

IMPACT BOND PRIMER

IMPACT BOND PRIMER

1. The investor provides upfront capital to the service provider to deliver services to a population in need.

2. An independent evaluator verifies whether the service provider has achieved pre-agreed impact metrics

3. The outcome funder repays the investor if the metrics are achieved.

101 IMPACT BONDS CONTRACTED GLOBALLY

SECTORS: IMPACT BONDS CONTRACTED GLOBALLY

HEALTH

SOCIAL WELFARE

EMPLOYMENT

EDUCATION

CRIMINAL JUSTICE

ENVIRONMENT &

AGRICULTURE

WHY IMPACT BONDS FOR HEALTH?

• Impact bonds in the health field have three potential goals:

• Preventing illness –reducing direct and indirect costs

• Reducing indirect cost (social/economic) of illness

• Finding a cure for disease

•Most contracted impact bonds to date fall into the first category

• 13 contracted impact bonds globally

• Focus areas:

• Preventive: hypertension, diabetes, maternal and newborn health

• Reducing indirect costs of illness: reducing sick leave, work reintegration for

cancer patients, physical rehabilitation, mental health

• 11 in High-Income, 2 in Low- or Middle-Income countries

• Average contract length of 54 months

• Sum of upfront capital: $24 million

• A further 9 impact bonds for health in design in LMICs

WHAT DO WE KNOW ABOUT IMPACT BONDS

FOR HEALTH?

IMPACT BONDS FOR HEALTH: EXAMPLES

Example: Israel Type II Diabetes SIB

Yaron Neudorfer

CEO

Social Finance Israel

Contact: [email protected]

Impact Bond for Health –

Potential, Applications & Tackling Type 2

Diabetes Case Study

Social Finance Israel ©

Disclaimer: The information in this presentation is not a recommendation or an offer of any securities and is provided solely for your information purposes. While the structure of the Social Impact Bond will be as described below, the specific numbers stated below are solely as examples. Any references to securities listed in this document are not intended to constitute a current or past recommendation, investment advice of any kind, or a solicitation of an offer to buy or sell any securities or investment services. This presentation and the information in it is the sole

property of SFI and it is prohibited to make any use of it, including copying, replicating, sending to a third party, without an upfront written consent from SFI.

14Social Finance Israel ©

Why don’t healthcare systems focus on prevention?

• Prevention programs usually contain

challenging behavioral change

components – creating risk for

healthcare providers.

• From the provider point of view, there is

a high probability that resources

invested in prevention would not yield

the desired outcomes

• Eliminating this financial risk can improve

financial results for healthcare systems

• By their nature, healthcare systems are

designed to deal with the most urgent

problems

• Prevention programs have impacts that

can be observed on the long term, and

their cost effectiveness must be proven

in the short term

Prioritizing: Important vs UrgentPrevention programs are usually

risky

Traditional healthcare providers

are not “experts” in prevention

• Healthcare providers concentrate on

treatment and have developed expertise

in treatment.

• Prevention is a different kind of

expertise, which requires different

personnel and different thinking.

• Therefore, although healthcare providers

can deliver prevention programs,

chances are that an “expert”

organization will do a better job


Advantages of SIBs in supporting preventive medicine

• Healthcare providers benefit from the

pooling of resources in cases where

economic value is distributed among

several players in the system

• Investors bear the financial risks

• Investors bear efficacy risks

• Healthcare providers can continue

providing treatment without shifting

resources and management attention

• By definition, SIBs must incorporate

rigorous measurement and a predefined

target population

• Healthcare providers can prioritize

specific populations and issues

• The SIB’s predefined timeframe creates

funding security for long term preventive

programs, reducing the risk of

cancellation due to policy change

Certainty and defined target

populationReduced risk for healthcare

providers

Drive innovative solutions and

expertise

• The pay-for-success mechanism

incentivizes innovative solutions

• Performance management ensures

constant efficiency and learnings

• SIBs provide the flexibility to improve

upon intervention components,

programs or service providers and shift

resources to more successful strategies

• The selected service provider has

expertise in prevention programs


Considerations for a prevention SIB

• Is there a social need for intervention?

• How large is the potential target population?

• What would be the impact on Israeli society?

Social Need

Social Impact Potential SIB Compatibility

• Is there any existing knowledge in Israel?

• Are there any existing measurements of success?

• Among how many players are the economic benefits distributed?

(preferably >1)

• Is the government/ healthcare system willing to pay for success?

• Are there any potential service providers?

• Are the economic benefits detectable and measurable?

• Are the potential results measurable?

• Is there a SIB operating abroad?

• Does the intervention incorporate behavioral change?

• Has the intervention been tested before (scaling-up)?

• Is the intervention model innovative?

Operability

Compatibility with the SIB Model

Former Knowledge & Behavioral Change

Investors’ Risk

Former Knowledge

Low Mid High


Tackling type 2 diabetes SIB

Impact investors

Pay for success

Professional

Intervention

Based on reducing

allowances

Based on

reducing costs

Innovative

solutionsHMOs

Treating 2,250 high risk pre-diabetics

External evaluation

5.3$ Million upfront capital

Raising awareness, nutrition

adherence, physical activity

and support groups

Means and applications to

monitor physical activities,

E.g., mobile app, wearables,

etc.

Data, tests and

ongoing

monitoring


Who are the investors?

15 Impact investors

50% International50% Israelis

Diverse background and motivations:

Philanthropic funds

Impact funds

Commercial bank

High net worth individuals

Family offices


Tackling type 2 diabetes SIB - Intervention

A year of intensive intervention

A year of moderate intervention

3-5 years of measurement

High risk pre-diabetics

3 cohorts

400-1000 participants per cohort

The program is built on existing international experience and best practices

providing personalized and culturally sensitive fitness and nutrition plans

coordinated by dedicated case managers

NutritionPhysical

activityTechnologyMotivationWorkshops

Measuring the results of the intervention group

compared to the comparison group

Reduction in transition to diabetes


Tackling type 2 diabetes SIB - Innovation and Distinctions

• 3 different outcome payers are

collaborating in this SIB:

• 2 HMOs – Paying for direct cost of

treatment, medicine, and inpatient days

• National Insurance Institute – Paying for

reduced disability allowances payments

• All the outcome payers agreed to the

same measurement of outcomes

• This Social Impact Bond pools resources

in order to make the intervention

feasible for all of the outcome payers

Pooling of Resources

• Type 2 diabetes is a global epidemic

• Many healthcare systems are looking for

sustainable solutions to deal with the

growing numbers of diabetics

• This SIB has the potential to prove that

an intensive intervention can prevent the

progression to diabetes and be more

cost effective

• SIBs are attractive to governments due

to the lack of financial risk they see by

virtue of the Pay for Success model

Global scale potential Referral process

• Participants are chosen according to an

innovative scoring system

• The scoring system was developed by

the Clalit Research Institute. It predicts

patient’s risk of developing diabetes

within the following years based on big

data

• The referral process is based on

collaboration between outcome payers

and service providers

Example: Rajasthan Maternal and Newborn Health DIB

Priya Sharma

Senior Policy and Innovative Financing Advisor

Center for Accelerating Innovation and Impact at USAID

@psharma1304

[email protected]

RAJASTHAN MATERNAL & NEWBORN HEALTH DIB

ISSUE

1) Rajasthan has one of the highest maternal and neonatalmortality rates in India.

2) While the Government of Rajasthan has greatly increased thenumber of women delivering in facilities, this has not resulted inthe expected improvement in maternal/newborn outcomes.

3)Researchers believe that this has resulted, in part, from a lackof quality facilities in the State.1

RAJASTHAN INDIA

282

1782

HighMMR

LowMMR

322

of every 1,000 newborns will die

2552

of every 100,000 mothers will die due to childbirth

78%3

of women receive labor and delivery care in facilities 79%4

Sources: 1.Randive, B. India’s Conditional Cash Transfer Programme (the JSY) to Promote Institutional Birth (2013) 2.Sample Response Survey 2010-2012; 2013 3. Palladium Research 4. Rapid Survey on Children 2013-2014. Graphic: Social Finance UK

Rajasthan

OVERVIEW OF THE OPPORTUNITY

TRANSFORM QUALITY OF CARE IN FACILITIES


A standardized way to assure quality will allow the Government of Rajasthan to channel government funds to private facilities offering quality care – a cost-

effective approach to saving lives.

The Government of India recognizes quality of maternity care as an essential area of investment to increase maternal and early newborn survival. While

public facilities are subject to government quality standards to be considered for reimbursement programs that drive volume, private facilities are not required to meet quality standards to access reimbursement programs.

Pri

vate

Pu

blic

The partnership seeks to achieve impact at scalewith a relatively small and catalytic investment.

The intervention focused on improving andstandardizing the quality of maternal care inprivate healthcare facilities in Rajasthan. To focuson impact, they mission will utilize a pay forperformance structure, with deployment ofcapital directly connected to the achievement ofoutcomes. The project will take place over threeyears with a total investment of up to $9M.

Through a government approved certificationprocess, NABH-FOGSI, private facilities will beaccredited based on the ability to meet specificquality standards for maternal care. The MCHimplementing partners will guide facilitiesthrough quality improvements to meet thisstandard as well as the application process.

IDEA

Wh

at?

Ho

w?

IMPACT

Wh

y?

Over the course of three years, the intervention is projected to:

This intervention will be rolled out across Rajasthan, covering a geographic market of over

75 million people and…

Impact the lives of up to 600,000 pregnant women, allowing us to…

Save the lives of up to 10,000 women and children in Rajasthan over the next 5 years1


1 Determined through modeling using the Lives Saved (LiST) tool

The Rajasthan Maternal and Newborn Health Development Impact Bond

1. UBS Optimus Foundation provides PSI and HLFPPT with working capital

2. PSI and HLFPPT, under the direction of Palladium, begin working with private facilities to improve quality of maternal and neonatal care

3. Outcomes are achieved, i.e. facilities are accreditation ready

4. Mathematica verifies the achievement of outcomes

5. Verification of outcomes triggers the outcome payments from USAID and Merck for Mothers who have made up to $8M available for outcomes funding, over three years

Co-funded performance-based contract to service providers & an investor up to

$8M over three years

34

1

25

SUSTAINABILITY: LOOKING BEYOND YEAR THREE…

Should the pilot project prove successful:

Designed to be catalytic

1

The Government of Rajasthan has committed to finance the program with additional investmentsA project MOU has already been signed between the project’s performance manager and the State Ministry of Health.

Private insurance schemes will be attracted to accredited facilities, creating financial incentives for facilities to invest in continued self-improvement and ensure accreditation is renewed

2

Impact

This sustainability will lead to long-term health impacts for women and children after the MCH DIB implementation is complete. Without analysis of program expansion, through 2021 it is projected that the project will achieve the following:

Up to 10,00women and newborns saved

Up to 600,000Pregnant women impacted

Example: Nurse-Family Partnership South Carolina

Dr. Tara Jethwani

National Strategic Initiatives Manager

Nurse Family Partnership

[email protected]

NFP South Carolina Pay for Success Project

Nurse-Family Partnership

Evidence-based, community health program that helps

transform the lives of vulnerable mothers pregnant with

their first child.

Four decades of research re: Nurse-Family Partnership’s

(NFP) favorable impact on:

Pregnancy Outcomes

Child Health and Development

Economic Self-Sufficiency of the Family


EXPERT:

Specially-trained nurses

PROVEN:

Extensive and compelling

evidence

INTENSIVE:

Pregnancy through age 2

TIMELY:

First 1000 days


Families served since replication began in 1996: 269,311

Families currently enrolled: 33,467

Number of Nurse Home Visitors: 1,867

Number of Counties: 586

Number of States: 42 + U.S Virgin Islands and 6 Tribal communities

September 2017

NFP South Carolina PFS Project

South Carolina and NFP launched nation’s first Pay for

Success (PFS) project to improve maternal and child health

outcomes for low-income families

• Pilot: January 2016; Launch: April 2016

• Extends NFP services statewide to an additional 3,200 Medicaid-

eligible first-time moms and their children over a 6-year period

• Spans 29 of South Carolina’s 46 counties

• Includes 9 implementing agencies delivering NFP services

Project Leverages Private and Public Funding

• Philanthropic investment + Medicaid reimbursement via 1915(b)

waiver awarded to the South Carolina Department of Health and

Human Services (SCDHHS) by the federal Centers for Medicare and

Medicaid Services (CMS).


PROJECT PARTNERS

Service Provider Nurse-Family Partnership National Service Office

(9 NFP Implementing Agencies in SC)

Philanthropic

Investors

BlueCross BlueShield of South Carolina Foundation;

The Duke Endowment; The Boeing Company; Laura

and John Arnold Foundation; Consortium of private

funders

Outcome Payor SC Department of Health and Human Services

Intermediary Social Finance

Technical

Assistance

Harvard Kennedy School Government Performance

Lab (GPL)

Evaluator Abdul Latif Jameel Poverty Action Lab (J-PAL) North

America


Methodology

• Randomized Controlled Trial (RCT)

Outcome Metrics

• Reduction in preterm births

• Reduction in child injuries

• Increase in healthy birth spacing between 1st and 2nd child

• Increase in number of first-time moms served in low-income

zip codes

Evaluation

• Independent Evaluators measure level of outcomes

achieved to inform outcome payments


Innovations

Increase Caseloads

Implement Telehealth

Employ Robust Marketing and Outreach Campaigns

Reduce Program Cost, Scale Up and Maintain NFP

Model Fidelity


Successes:

Closing enrollment gap

Nurse education

Challenges:

Locating young moms and

moms in low-income zip codes

Nurse recruitment and retention

Conversion of Medicaid referrals to enrollment

AUDIENCE Q&A

Funding the cure for a disease - Mission:Cure

Megan Golden

Co-founder

Mission: Cure


@mgoldennyc

A NEW MODEL FOR CURING DISEASE

DRIVEN BY FINANCING BASED ON

PATIENT OUTCOMES AND IMPACT

INVESTMENT

© Mission: Cure

Why Don’t We Have Treatments for

Debilitating, Expensive Diseases?

The Valley of Death: insufficient resources for promising treatments

Incentives based on profit not patient outcomes

Stakeholders competing rather than collaborating to achieve results

Traditional scientific process does not match patients’ timeframes

Mission: Cure mission-cure.org

http://mission-cure.org/

http://mission-cure.org/

Ou

r Ap

pro

ac

h

Our First Target: Pancreatitis

Patients are Desperate

…I run a support group for chronic pancreatitis, we have almost 2000 members and they have asked me to write to you in an effort to find out about human trials and when they might begin. We are having a tough time getting pain control these days and many have attempted suicide because they just can't take the pain any longer.

Most Dr's are pretty clueless on this disease, especially in E.R.'s around the country, treating many as drug seekers and humiliating them only to turn them away with no help. We NEED help with this disease….

Many of us are willing to volunteer as test subjects, if not to help us to help future patients and the kids who get this horrible disease….

Chronic Pancreatitis is Costly

Sources: Uc et al, Direct Costs of Acute Recurrent and Chronic Pancreatitis in Children in the INSPPIRE Registry, JPGN, March 2016;

January ACP Internist, copyright © 2014 by the American College of Physicians; Cost Burden of Chronic Pain Patients in a Large Integrated Delivery System in the

United States, Pain Practice, Nov. 2016, p. 1001.

122,000 outpatient visits & 56,000 hospitalizations/year in the US

•> 90% of US CP patients hospitalized for pain

Analysis of children shows $40,589 in medical costs/year; for 150,000 chronic pancreatitis sufferers = $6.09 billion/year

Chronic pain care in US costs $32,000 per person/year; for 150,000 chronic pancreatitis sufferers = $4.8 billion/year

How the Financing Will WorkO

utc

om

e P

ay

ors Agree to pay

for specific patient outcomes over 10 years

Imp

ac

t In

ve

sto

rs Finance Mission: Cure for returns based on patient outcomes and market

Mis

sio

n:

Cu

re Invests in & manages coordinated therapy development efforts In

10 Y

ea

rs...

Patients improve through new therapies; impact investors receive return

Possible Patient Outcomes to Determine

Payment

Emergency room visits/days

in hospital

Time absent from work or

school

Pain (validated measure)

Survival

In 8-10 years

4

8

Strategies to Develop Effective Treatments

Advanced genetic testing & precision medicine

Test promising already-approved drugs using efficient, innovative trial designs

Incentives to move new molecules through the development process efficiently

Convene experts and innovators to problem-solve4

9

Using Impact Investing To Cure

Disease: An Idea Catching On

Venture Philanthropy & Disease-Specific Investing Examples

Results

• live longer, healthier, less painful, more productive lives

Patients and those at risk for chronic pancreatitis

• help cure a disease and also received a financial return

Impact investors

• have funding and support for their efforts to help patients and cure disease

Scientists and clinicians

• invest in new technologies that reduce their long-term costs, while demonstrating commitment to clients’ wellbeing

Healthcare and life insurance payors

• engage in risk-free outcome-based philanthropy: they do not pay unless they have cured a disease

Venture philanthropistswho pay for patient

outcomes

Partners

Innovative Financing for Health: Expert Response

Ambassador (ret.) John Simon

Vice-Chair of the Board

The Global Fund to Fight AIDS,

Tuberculosis and Malaria

& Founder and Managing Partner of Total Impact Capital

AUDIENCE Q&A

For more information on Brookings impact bonds research:

www.brookings.edu/series/impact-bonds/


@EGWBrookings

Credit: RFUK

Thank you!

Documents

Webinar: Impact Bonds in Health - Brookings …...• Achieving the SDG health targets would require new investments increasing over time from US$ 134 billion annually to $371 billion